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Productivity, the art of doing more with less effort, is the source of civilization's miracle of increasing wealth, but it's often seen as the road back to serfdom. Using the blessing of productivity, people can buy more things in exchange for the same amount of labor wages, but the curse of productivity is that fewer workers are required to produce the same amount of things.

Thus the quest for productivity creates progress and economic growth; it also creates a need for innovation and economic growth: New tasks must be found to employ the workers who used to be in demand but became redundant.

The Center for Automotive Research in Ann Arbor, Mich., counted 442 automotive and parts plants operated by the Big Three U.S. car companies in 1979, when U.S. companies built 9.4 million cars and light trucks and there was only one foreign-owned assembly plant in the country. By 2011, only 180 Big Three plants remained, producing 4.9 million units, according to WardsAuto. But 10 foreign car companies, from Japan, South Korea and Germany, had 24 assembly plants here, plus associated parts manufacturers.

Give and Take

Those foreign-owned plants produced 3.5 million more vehicles in the U.S. market, so that the industry as a whole grew, at the expense of the Big Three. More important for good and for ill, the foreign-owned plants proved to be much more efficient than those the Big Three operated in 1979. Sean McAlinden of the Center for Automotive Research has estimated that for every job created by foreign car companies in the U.S. between 1990 and 2007—before the big recession—the Big Three shed 6.1 jobs.

Some call it downsizing and some call it rightsizing, but there's no doubt that a modern auto factory with modern work rules, such as those operated in the lower Midwest and the South by foreign car companies, can turn out more units in a shift than an older factory in the Detroit area staffed to the specifications of a contract with the United Auto Workers.

By no coincidence, the quality of cars produced in the U.S., both foreign and domestic, has improved greatly in the 32 years since the U.S. industry hit its doomed peak in 1979. Productivity not only makes things cheaper, it also makes them better. The pressure on the U.S. companies came from the loss of profits and from consumers' demand for better cars.

It's easy to see the jobs lost to productivity improvements. Detroit has become a tourist destination to see white-elephant factories and vast wastelands of residences in a city that has lost half its population. But it's harder to be aware of the huge benefits of productivity.

Comparison Shopping

Donald Boudreaux, a professor at George Mason University in Virginia, has been following the miracle of productivity in posts at his Café Hayek blog. Boudreaux is the sort of economist who likes to curl up with the 1956 Sears Roebuck catalog, because he has been wondering what consumer goods cost in 1956 compared with their cost at the end of 2012.

Rather than wrestle with consumer-price indexes and argue about calculations of inflation, Boudreaux determined how many hours the average nonsupervisory manufacturing employee would have had to work to purchase some of the good things in the catalog.

How many hours of work did it take the 1956 worker to earn the money to buy a frost-free refrigerator-freezer from Sears and how many hours of work were required to earn the price of an equivalent appliance in 2012? The Sears catalog's cheapest, with capacity of 9.6 cubic feet, was $219.95. Going online to the Home Depot Website turned up a 10 cubic-foot appliance for $298.

The hourly wage of such a worker in 1956 was $1.89 an hour. In 2012, the statistical reports had changed a little, but the close equivalent wage was $19.79 an hour.

So it took your 1956 worker 116 hours of work to buy a basic refrigerator-freezer, but the 2012 worker needed only 15 hours to buy more or less the same product. For a cheap TV, Mr. 1956 had to work 61 hours; Mr. 2012 put in 10 hours. For a new washing machine, Mr. 1956 had to work 79 hours, and Mr. 2012 had to work 15 hours.

In clothing, the degree of difference is much less, but always different in favor of the present day. Sears sold an all-wool men's business suit in 1956 for $42.50, or 22.5 hours of work at the average manufacturing wage. In 2012, Sears offered no all-wool suits that Boudreaux could find, but on the Website of Joseph A. Bank he found one for $200, or 10 hours of work. An all-cotton dress shirt to go with the suit would require an hour of work in 1956 and 45 minutes of work in 2012.

At those prices, the 1956 worker, nominally a member of the middle class, would have been most likely shopping at Sears for the cheapest product. The modern worker, also hanging on to the lower part of the middle class, is much more likely to pass up the cheapest appliance in favor of something better, which he can buy on credit less readily available to his predecessor of 1956.

Quality Difference

Some 2012 products, especially those with electronic innards, are enormously better than the 1956 antecedents. The least impressive color TV at Best Buy is bigger, better, and more reliable than the black-and-white TV of 1956. Cars have so many new features that comparisons are nearly impossible.

We should understand that productivity improvements have changed automobiles, appliances, clothing, and our way of life. Producing more with fewer inputs is the source of the world's increasing wealth, although it makes it harder to create jobs.

Even moving the entire U.S. textile and dry-goods industry for cheap labor offshore did not produce such dramatic price reductions as the automation that has changed U.S. manufacturing, doubling output since 1975 while employing only two-thirds as many workers.

We should expect it will continue: Foxconn, the manufacturing concern that makes consumer-electronics products for Apple and other companies, is planning to replace some of its 1.5 million workers with robots. The sure results will be higher quality and lower prices, in China and the U.S.